(Corrects amount in first paragraph of story published on Jan. 23)
Nine Entertainment Co. cut the interest rate it will pay on a A$700 million ($738.2 million) covenant-lite term loan the company is seeking to refinance debt, according to a person with knowledge of the transaction.
The seven-year debt will now pay interest at 2.75 percentage points more than the London interbank offered rate, down from 3.25 percentage points, said the person, who asked not to be identified because the information is private. The Libor floor remains at 1 percent.
The interest rate will step down to 2.5 percentage points more than Libor when leverage, or debt to earnings before interest, taxes, depreciation and amortization, is below 2 times, the person said.
Nine Entertainment is proposing to sell the loan at 99.75 cents on the dollar, compared with 99.5 cents initially proposed, the person said, increasing proceeds for the company and reducing the yield to investors.
Lenders are now being offered six months of soft-call protection of 101 cents, meaning the company would have to pay 1 cent more than face value to refinance the debt during the first six months.
UBS AG, Deutsche Bank AG, Morgan Stanley and Nomura Holdings Inc. are arranging the financing and commitments are due tomorrow at 5 p.m. in New York, according to the person. The debt is rated Ba2 by Moody’s Investors Service and BB by Standard & Poor’s.
The Australian broadcaster owned by CVC Capital Partners Ltd. also is seeking a A$ 100 million five-year revolving line of credit that pays 2.75 percentage points more than Libor with a 50 basis-point fee on any unused portions, the person said.
Covenant-lite debt doesn’t carry typical lender protection such as financial-maintenance requirements.
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